Earlier this year we reported that Germany’s government was in the process of legislating to protect objects of national heritage and restrict their export from Germany.

The new Act for the Protection of Cultural Property automatically (and practically, overnight) adds to the list of items declared as national cultural property, all items:

owned by the public and held by a public institution holding cultural property (e.g. a national museum);

owned and held by an institution holding cultural objects that is financed predominantly by public funds (e.g. a museum primarily funded by the German taxpayer); and

forming part of a collection owned by the Federal Republic or a German state.

In addition, all objects listed (now and in the future) by any one of the 16 German states as a “cultural object of national importance” also qualify as national cultural property.

All items of national cultural importance require an export license before they can be transported outside of Germany. An export license is “to be rejected, if, having regard to the merits of the application on a case-by-case basis, material considerations of Germany’s cultural heritage are prevalent”. (KGSG, para 23(3), available at http://www.gesetze-im-internet.de/bundesrecht/kgsg/gesamt.pdf).

This gives the German state a huge amount of discretion to block the export of objects that fall within the category of national cultural property. Beyond that, the new Law allows the export of such items only if they are either (i) Nazi-looted objects; or (ii) only intended for a temporary export.

Cultural property is defined as “any moveable item or aggregation of tangible assets of artistic, historic or archaeological value or from other areas of cultural heritage, in particular paleontologic, ethnographic, numismatic or scientific value”. The definition is extremely wide and practically any object that would ordinarily be traded on the art market is capable of falling within it.

For precisely that reason, there has been a lot of criticism of the new law. In particular, some artists have either withdrawn some of their works from German museums, or threatened to do so; German art collectors are reported to have asked for artworks loaned to German museums to be returned; and there have also been numerous reports of artworks being removed from Germany in anticipation of the law being passed (we reported).

The law came into force on 6 August 2016. It will be interesting to assess its impact on Germany’s art market. A lot will depend on how the new powers are being used in practice. We will continue to watch this space.